Because he was overconfident and relied on it more than anything instead of being smart with it. It's how a team of genin were able to coordinate an attack that broke it. Basically he put his other skills on the back burner from it. So the wielder sucked at using the sword while the sword itself is OP.
I can buy his being overconfident and being defeated for it; that's basically what happened with Kabuto in canon.
I don't buy that his not using it properly was the reason why the sword got destroyed, else it would have gotten trashed earlier.
The Sage's Tools didn't get thrashed when they were used for the first time by Tenten, nor did Samehada get messed up when Killer B took possession.
And no, the weapon is not OP.
OP weapons don't get left on a shelf where random genin can steal them.
When OP items get lost, there are manhunts and bounties, like we saw when Naruto grabbed the Scroll.
No armor blocks it. It converts lightning chakra insanely well. And a main lightning elemental user with it would be awesome.
For one thing, armor is not really a thing in the Narutoverse; the heaviest we see in common use is the flak jacket. For another, there is no evidence that it would work with Lightning Release; it's effect is nothing like the way Lightning Release works in Naruto.
Lightning Release cuts; the SoTTG shocks.
Certainly, the only user we see using it in canon was not a Lightning Element user.
And all this assumes it's even a thing in this quest, since it was a one-off invention for filler.
I don't expect to see Mecha-Naruto here, either, or the Mysterious Peacock Method.
Also he was a chunin when he got the sword from from Idate or whatever his name was, basically in the same position as Mizuki who didn't have enough talent to advance int he ranks. He became Jonin because the sword covered for some of his weaknesses from my understanding of it.
I call bullshit.
You don't make jounin because you can flip a switch on a tool, any more than possession of a two tomoe Sharingan is enough to make you chuunin, or the ability to channel bijuu chakra gets you a promotion.
Again, dude is supposed to have been employed by Ame.
Pain's village.
Nagato et al have no motive to give a missing-nin jounin-rank unless his skill repertoire explicitly meet the requirements for the class.
If his expertise came from the sword, they could simply take the sword away and give it to a native whose loyalty is not in doubt.
Actually anime filler. Shit blurred together for me. >.>
Neither Kakashi breaking his sword or Suigetsu breaking his is filler though.
Unless you refer to other stuff.
And we have, just not that yet.
Look at our character sheet. Note what isn't there.
Note that genjutsu is on the sheet, despite being 0, and fuinjutsu is not.
Fuinjutstu is also not the end all and be all like you are making it out to be.
Okay, now you are just flat out wrong. Let's skip over vanilla Hiraishin for a moment.
Minato: Bijuudama-teleporting barrier seal. Jinchuuriki seal. Contract seal that freed Kurama from Tobi's control.
Jiraiya: Amaterasu-containing seal. Bijuu-suppressing seal.
Danzo: Paralysis seal. Suicide seal. Root silence seal.
Tsunade: Strength of a Hundred Seal
Sarutobi(and the other Kages): Red Yang barrier seal.
Hyuga: Caged Bird seal.
Itachi: Contingency seal he set to throw Amaterasu at Tobi.
Everybody else: Storage scrolls. Explosive tags(?). The various seals that were used to stop the Edo Tensei zombies in the Fourth War. Most barrier seals. Medical seals like the ones used to treat Neji after Kidomaru blew a crater in his shoulder.
And that's not an exhaustive list by any means.
TL ; DR
Fuinjutsu is a big fucking deal.
Don't fool yourself otherwise.